Kinder Morgan, Inc. KMI reported first-quarter 2024 adjusted earnings per share of 34 cents, beating the Zacks Consensus Estimate by a penny. The bottom line increased from the year-ago quarter’s earnings of 30 cents.

Total quarterly revenues of $3.8 billion missed the Zacks Consensus Estimate of $4.4 billion. The top line also declined from $3.9 billion in the prior-year quarter.

Strong quarterly earnings were primarily driven by increased financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Reductions in total costs and expenses further enhanced the quarterly performance.

Kinder Morgan, Inc. Price, Consensus and EPS Surprise

Kinder Morgan, Inc. price-consensus-eps-surprise-chart | Kinder Morgan, Inc. Quote

Dividend Hike

Kinder Morgan announced a quarterly cash dividend of 28.75 cents per share for the first quarter of 2024 (annualized dividend of $1.15). This represents a 2% hike from the first quarter of 2023. The dividend is payable May 15, 2024, to shareholders of record as of Apr 30, 2024.

Segmental Analysis

Natural Gas Pipelines: In the March-end quarter, adjusted earnings before depreciation, depletion and amortization expenses, including the amortization of the excess cost of equity investments (EBDA), increased to $1.5 billion from $1.4 billion a year ago. The segment's performance was significantly enhanced by increased margins on the company's storage assets and higher throughput in gathering systems. Additionally, the recent acquisition of STX Midstream also contributed positively to the results.

Product Pipelines: The segment’s EBDA in the first quarter was $293 million, reflecting an increase from $251 million a year ago. Higher interest rates on existing assets, combined with the financial contributions from newly launched capital projects, primarily supported the performance of the segment.

Terminals: Through the segment, Kinder Morgan generated quarterly EBDA of $269 million, higher than the year-ago period’s $254 million. Liquids terminal expansions and higher rates on Jones Act tankers boosted the segment. The gains were partially offset by reduced petroleum coke volumes due to refinery turnarounds and unplanned outages.

CO2: The segment’s EBDA was $166 million, down from the year-ago quarter’s $173 million. The underperformance resulted primarily from lower CO2 sales volumes.

Operational Highlights

Expenses related to operations and maintenance totaled $680 million, up from $639 million a year ago. Yet, total operating costs, expenses and others were marginally down to $2,619 million from $2,694 million.

Distributable Cash Flow (DCF)

Kinder Morgan’s first-quarter DCF was $1.42 billion compared with $1.40 billion a year ago.

Balance Sheet

As of Mar 31, 2024, KMI reported $119 million in cash and cash equivalents. Its long-term debt amounted to $30.1 billion at the quarter end.

Guidance

For 2024, Kinder Morgan has projected a net income, including earnings from the newly acquired STX Midstream assets, of $2.7 billion, suggesting a 15% increase from that reported in 2023.

Additionally, the company anticipates a DCF of $5 billion ($2.26 per share) and an adjusted EBITDA of $8.16 billion for 2024, each indicating 8% growth from the previous year’s reported figures. KMI aims to close the year with a net debt-to-adjusted EBITDA ratio of 3.9 times.

Zacks Rank & Stocks to Consider

Kinder Morgan currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. The three companies presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Core Laboratories N.V. CLB is an oilfield services company, operating in more than 50 countries. Core Labs’ strong presence in the emerging shale plays and its global footprint provide for steady growth rates, going forward.

Core Laboratories has a Zacks Style Score of B for Value and Growth. The consensus estimate for CLB’s 2024 and 2025 earnings per share is pegged at 95 cents and $1.24, respectively.

SM Energy Company SM is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition, and production of oil and gas in North America. SM currently has a Momentum Score of B and a Value Score of B.

The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.21 and $6.70, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Enerplus Corporation ERF is an independent oil and gas production company with resources across Western Canada and the United States.

Enerplus has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days. The consensus estimate for ERF’s 2024 and 2025 earnings per share is pegged at $2.06 and $2.36, respectively.

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